ETF providers need to petition the SEC to allow changes in standing listing rules for a given ETF, jumping through the 19b-4 process, which can take up to a year or more.
“The reality is they’re trying to get their arms around derivatives… and they’re trying to take a measured approach in allowing products to come to market,” one ETF executive, who requested that his name not be used, said in the FT article. “There’s just a lot of extra effort in reviewing these products.”
The SEC lifted its moratorium on derivatives usage in active ETFs in December 2012. Regulators, though, have kept the freeze on applications for leveraged and inverse ETFs. [SEC to Lift Freeze on Active ETFs That Use Derivatives]
For more information on active ETFs, visit our actively managed ETFs category.
Max Chen contributed to this article.